Nigeria Struggles to Meet Oil Production Capacity Due to Investment and Security Challenges

Nigeria is currently facing significant challenges in meeting its technical allowable capacity for oil production, according to a recent announcement by the Federal Government.

The government cited lack of investment, insecurity, and a reduction in hydrocarbon funding arising from energy transition as some of the reasons for the low oil output.

During a host communities sensitisation workshop held in Abuja, the Nigerian Upstream Petroleum Regulatory Commission disclosed that Nigeria’s technical allowable capacity for oil production is about 2.5 million barrels per day. However, the country’s current oil production hovers around 1.5 million barrels of oil and condensate per day, largely due to the challenges highlighted by the commission.

The Chief Executive of the NUPRC, Gbenga Komolafe, who was represented by the Commissioner, Economy, Regulatory and Strategic Planning, Kelechi Ofoegbu, noted that the commission is prioritizing efforts towards increasing oil and gas production and ensuring maximum federation revenue through the optimization of the oil and gas value chain. However, these efforts have been constrained by a myriad of challenges.

Komolafe explained that the PIA had domesticated the protection of Nigeria’s oil and gas infrastructure to the host communities in a bid to stem the tide of sabotage and third-party interferences.

The PIA also incorporates the Host Communities Development Trust provisions, which will enhance peaceful and harmonious co-existence between oil and gas industry operators and host communities, and ultimately support the development of host communities.

The implementation of the Host Communities Development Trust provisions is expected to impact positively on the people of the Niger Delta and other oil and gas host communities. The NUPRC has approved 75 Host Community Development Trusts, out of which 41 have been fully incorporated by the Corporate Affairs Commission.

The commission has also pre-qualified a total of 19 fund managers and commenced the process of establishing a baseline of ongoing community development projects, in preparation of ensuring the migration of such into the HCDTs.

It is hoped that the implementation of these provisions will help address the challenges hindering Nigeria’s oil production and enable the country to meet its technical allowable capacity for oil production.